Distributors Stay Busy With Changing Trends

Distributors’ customers are looking for longer store hours,
greater technology, and more informed personnel as they endeavor to meet the
needs of end users. Having items in stock and readily available at all times is
no longer a luxury, but is becoming a necessity.

A distributor’s customer is the HVACR contractor. Everyday
the distributor brings in new supplies and then sends them out the door via
pick up or delivery. Their job, however, is more than just slinging parts.

According to the Heating, Airconditioning & Refrigeration
Distributors International (HARDI), a typical HARDI distributor has 1,200
active customers, ships 7,725 orders per month, receives 666 orders per month
from suppliers, has approximately 9,000 SKUs in inventory, and averages almost
$24,000 in sales per customer, per year. In the midst of all this activity,
finding new ways to deal with customers demands distributors to run the same
gauntlet of industry change as everyone else in the supply chain.

ON DEMAND PRODUCTS

“Customers are
expecting more refrigeration and IAQ products,” said Kevin Morris, parts
manager, cfm Distributors, Kansas City, Mo. “In reality, we are being asked to
be a one-stop shop.” Morris reported the green movement is prompting his entire
customer base to demand that his company and the products he supplies be
environmentally friendly, as well as energy efficient. These demands are being
expected not only in two-stage, variable-speed residential and commercial HVAC
equipment, but they are also being required for refrigeration systems as well,
he said.

Most likely resulting from the high demand that end users place
on contractors for immediacy, distributors are also finding themselves dealing
with a surge of contractors requiring products right away.

“They expect everything we say we stock to be instantly
available at all times,” noted Arthur Franklin, owner and president, S.
Franklin & Son Inc., Fairfield, N.J. “If we don’t have it, they do not want
to wait and will often find a second source.”

This impatience, along with a mild business slowdown, brings
the distributors’ prices under great scrutiny, said Franklin.

“Customers require a quick turnaround on the quotes we
prepare,” he remarked. “This is truly a more competitive environment.”

ALWAYS OPEN

Many of Manny Kaiser’s customers are looking for 24 hour a
day, year-round service and direct delivery to the jobsite. The president of
Acme Refrigeration of Baton Rouge Inc. in Baton Rouge, La., Kaiser is searching
for ways to better his delivery system to meet the growing needs of his
customers. One strategy the company is working on is online ordering.

“We have long believed in the value of allowing the customer
to take control of his ordering process,” said Kaiser.

“We are implementing an imaging system right now, and look
forward to the day when our customers can access their information, such as
copies of invoices, online via our Website.”

The company is still a little ways from an online catalog
with a shopping cart, but Kaiser believes it will “one day be the thing.” His
concern, however, is the rate at which his customers adopt new technology.

“We have not seen a lot of adoption yet, but we believe that
the more of our processes that are automated, the more we will increase our
accuracy, and increasing our accuracy increases the benefit to the customer,”
he said. “Our customers rely on us to solve their problems and have what they
need in stock.”

Franklin echoed Kaiser’s concerns over technology adoption.
According to him, it will be the progressive distributors that will offer
distribution-supply chain technology advances because contractors aren’t
typically asking him for it at this time. “My opinion is that as distributors,
we need to pull from the contractors, and they are not currently pushing it
[automated systems] on us,” he said.

Kaiser is also trying a new strategy in regards to store
locations. He considers his home market a place to “be aggressive, having
multiple stores in the area that are conveniently located for our customer
base.”

This not only makes his company more accessible to the
customer, but it also helps save both he and the customer’s fuel.

“Looking to the future, I am truly concerned as to how we
will be able to afford to continue deliveries with the cost of fuel, and where
I believe it will go,” he cautioned.

ASK THE COUNTER PERSON

As new technology enters the HVACR industry, both on the
contractor and on the distributor side, each supply chain participant is
requiring more training.

“Even at the counter level, the service technician is
expecting us to be very familiar with new technologies and to be able to answer
all their service questions,” said Morris. “We are also being asked for the
higher-end meters and tools. Thankfully, we have the training in place to
handle these questions and requests.”

WHAT LIES AHEAD

As trends naturally shift, Morris pointed out that HVACR
brands have become less of a focus. “The buying decisions are turning back to
being based on customer service and support from the locally owned and operated
wholesaler,” he said.

Looking ahead to the future, however, distributors will be
watching as new situations and concerns reach into their daily work scenarios.
One such concern is a labor shortage and the increasing diversity in the
up-and-coming multilingual workforce. According to Morris and Franklin, the
multilingual factor is creating a communication issue.

Franklin was also concerned about contractors’ dropping
participation at the local trade association level.

“For my customers to survive, they need to continually
better manage their workforce,” said Franklin. “Trade level association
involvement, installing GPS tracking in trucks, and service contracts are just
some of the things my customers should be looking at to improve.”

Morris cautioned that his customers also need more
distributor-offered education. “The lack of available talent in the employee
pool makes recruitment and retention critical,” he said. “Everyone must be
careful of rising labor and products cost. These factors, and others, force us
all to be as efficient and well-trained as possible.”

Publication date: 12/10/2007

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